After weeks of anticipation, GlaxoSmithKline disclosed its reorganization plans today and the brunt of the changes will be felt in North Carolina, as the drug maker looks to lower R&D spending and concentrate those activities elsewhere. The changes involve shifting more R&D work to the Philadelphia region, where U.S. headquarters are located, and Stevenage in the U.K.

Up to 900 jobs will be elminated, according to a filing with the North Carolina Department of Commerce. And funding for several research projects will be cut, but these were not specified. Besides R&D staff working in early drug discovery, development and clinical trials, sales reps will also lose their jobs, although Glaxo says those who are promoting new medicines are unlikely to be affected.

“The details are still unfolding, but we expect as part of this restructure existing roles will be lost in our US R&D and commercial organizations by the end of 2015,” a Glaxo spokeswoman writes us. “Some R&D roles will be relocated to the Philadelphia area and some staff will be offered relocation. In the U.S. we are reshaping and reducing the size of our commercial and R&D operations.”

Currently, there are 2,500 Glaxo employees and contractors working in R&D in Raleigh Triangle Park, North Carolina, where the drug maker employs a total of 4,000 people. And there are about 5,800 employees and contractors working in R&D in the Philadelphia region, where some 7,000 people work. All totalled, Glaxo employees roughly 17,000 people in the U.S. and about 99,000 worldwide.

The spokeswoman explains that the final number of layoffs may be minimized by such actions as recruitment freezes and not filling vacancies. And she says that about 450 employees in R&D may find themselves working for a new unit that will be run by Parexel, the contract research organization, in North Carolina. A letter of intent has been signed, she adds.

The move comes shortly after Glaxo promised to cut expenses by $1.6 billion annually over the next three years. The drug maker is struggling with declining sales in its key respiratory franchise. In particular, the Advair treatment experienced a 13% drop in revenue during the third quarter amid price cuts designed to appease insurers. Overall, global sales for this category fell 8% to about $2.2 billion.

Like its rivals, Glaxo has grappled with the loss of patent protection on big sellers and is taking various steps to remake itself. One effort involves shifting compensation for sales reps away from the number of prescriptions written by doctors, a move that, in part, reflected criticism over improper marketing that led to a $3 billion fine with the U.S. government two years ago.

At the same time, Glaxo is about to swap assets with Novartis. Glaxo is exchanging nearly all of its oncology business for the Novartis vaccines unit, while the two drug makers will form a joint venture in consumer health. The Glaxo spokeswoman notes these moves will involve transferring thousands of employees from one company to another as the broader reorganization plays out.

[EDITOR'S NOTE: This story was updated to note that, later in the day, Glaxo disclosed in a state filing in North Carolina that 900 jobs may be eliminated.]

]]>http://blogs.wsj.com/pharmalot/2014/12/03/glaxo-reorganization-to-shift-lots-of-rd-work-out-of-north-carolina/feed/8Glaxo Plans Hundreds of Layoffs in the U.S. as Part of a Reorganizationhttp://blogs.wsj.com/pharmalot/2014/12/01/glaxo-plans-hundreds-of-layoffs-in-the-u-s-as-part-of-a-reorganization/?mod=WSJBlog
http://blogs.wsj.com/pharmalot/2014/12/01/glaxo-plans-hundreds-of-layoffs-in-the-u-s-as-part-of-a-reorganization/#commentsMon, 01 Dec 2014 17:17:31 +0000Ed Silvermanhttp://blogs.wsj.com/pharmalot/?p=1098

Evert Lundquist’s ‘The Axe’ (1974) Evert Lundquis

As part of a recently announced reorganization, GlaxoSmithKline is planning to cut hundreds of jobs in the U.S., according to Bloomberg News. An announcement by Dierdre Connelly, who heads North American operations, is expected on Dec. 3, the news site adds.

Some layoffs would not be surprising, given that the drug maker noted in late October that the reorganization would involve reducing expenses by about $1.6 billion over the next three years, with much of that occurring in 2016. Since the Oct. 22 announcement, Glaxo sales reps have been chatting on Internet forums about the extent of anticipated job cuts.

A Glaxo spokeswoman tells us the aim of the cost cutting “is to improve performance by taking unnecessary complexity out of our operations and establish a smaller, more focused, organization, operating at lower costs that support our future portfolio. Each business unit is currently deciding how to respond to this challenge.” She declined, however, to be more specific. “When we do have proposals, we will first share those with our employees,” she adds.

The reorganization comes as Glaxo navigates a challenging stretch. In the U.S., which is its biggest market, sales have been declining – they fell 11% in the third quarter this year – amid increasing competition for respiratory treatments. Revenue generated by these – its biggest product category – fell 8% to roughly $2.2 billion, thanks largely to slumping sales of Advair, its best-selling treatment (see this).

During the third quarter, Advair sales dropped 13% to $1.5 billion, reflecting, in part, price cuts brought about by tougher negotiations with insurers. For instance, Express Scripts, the largest pharmacy benefit manager in the U.S., last year excluded the medication from its 2014 formulary, which is a list of drugs that receive insurance reimbursement. Advair was resinstated for 2015

Glaxo has been counting on two newer respiratory products – Breo and Anoro – to pick up the slack, but these have, so far, not met expectations. The drug maker is expected to experience an even bigger slide in Advair sales, meanwhile, if the FDA approves generics. Glaxo executives, though, continue to maintain that this is unlikely to happen before 2016, according to Wall analysts.

Amid the changes to be made in U.S. marketing is a tweak to the ‘Patients First’ program that was unveiled four years ago and designed to alter the way sales reps are compensated, according to Bloomberg. Rather than receive compensation based on the number of prescriptions written by doctors, reps have increasingly been compensated based on the knowledge of package inserts and scientific studies, although interactions with prescribers remain highly valued.

Glaxo has touted the program since paying a $3 billion fine two years ago to resolve criminal and civil litigation for illegally promoting some medicines, among other things. Since then, Glaxo chief executive Andrew Witty has promised changes in U.S. marketing and pointed to the change in sales rep compensation as a means to improve promotional practices.

[UPDATE: A Glaxo spokeswoman writes us that the drug makers remains "resolutely committed to our incentive compensation model and are on track to roll out this approach globally." ]

Hello, everyone, and nice to see you again. Although the calendar says otherwise, it certainly feels as if summer has come and gone, especially now that the long and restful holiday weekend on this side of the pond is over. And watching the shortest of short people clamor aboard the school bus this morning was another sure sign. Perhaps you can relate. If nothing else, that familiar routine of meetings and deadlines has returned with a vengeance, has it not? To cope, yes, we are quaffing a cup or three of stimulation. Do feel free to join us. Meanwhile, here are some tidbits. Hope you survive the day and stay in touch…

Novo Nordisk is pulling out of inflammatory disorder R&D to increase its diabetes and obesity efforts, following the failure of an investigational rheumatoid arthritis drug, Pharma Times reports. The R&D inflammatory pipeline included another treatment for RA, one for lupus and two Phase II compounds for Crohn’s disease. Some 400 employees will be affected by the decision but Novo hopes to offer other positions within the company to more than half of those staff.

GlaxoSmithKline faces a shareholder revolt over plans to shake up its board, with leading investors calling for the speedy departure of chairman Chris Gent, The Sunday Times confides. Gent plans to depart next year, but several big institutions, that are riled by Glaxo’s poor share price performance and a growing list of corruption claims, want a change this year and are considering approaching senior independent director Deryck Maughan. Philip Hampton, the chairman of Royal Bank of Scotland, is the likely successor.

Consumer advocacy groups working to improve access to medicines have protested against the participation of non-government organizations, especially patient groups that receive funding from drug makers, in the meeting on quality and safety of biosimilars which was held before the International Conference of Drug Regulatory Authorities in Rio, Brazil, The Times of India says. The groups complain drug makers are trying to thwart cheaper copies of biologics that are going off patent from coming to the market.

An Exelixis cancer drug failed to prolong survival in men with advanced prostate cancer in a phase III study and as a result, 70% of its workforce, or 160 employees, will be let go, TheStreet writes.

South Korea has lifted a ban on the use of the zilparterol animal feed additive in beef, opening the door to imports such as Merck’s Zilmax, which contain the growth enhancer, Reuters says.

Cipla hopes to win a bigger slice of the U.S. market with a version of the Advair asthma medicine sold by GlaxoSmithKline, and plans to seek FDA approval for an aerosol version later this year, according to Bloomberg News.

The Japanese unit of Novartis confirmed late last week that more than 2,500 cases of serious side effects in patients using its leukaemia and other cancer drugs, including some fatalities, were not reported, writes The Japan Times.

Scientists are working to develop new techniques to administer medication for glaucoma patients that replace the usual regimen of twice-daily eye drops, a sometimes unreliable treatment, according to The Wall Street Journal.

A clinical study found that AstraZeneca’s Brilinta blood thinner is safe to use in the ambulance when heart attack patients are being rushed to hospital but giving it early in this way does not provide any extra benefit, Reuters tells us.